IT outsourcing will save one council more than 22 million GPB over the next eight years and will help fund a tax freeze, it is claimed.

The City of Edinburgh council says that the extension of its outsourcing plans - which have already been running for two years - will partially go towards ensuring there is no increase in council tax.

It also said that the project will "help drive forward the council's modernisation programme".

Councillor Gordon Mackenzie, convenor of the Finance and Resources Committee, explained the reasoning behind its decision.

He said: "We have the challenging task of modernising and improving services for the people of Edinburgh. At the same time, Councils across Scotland are facing tight financial constraints and are being asked to deliver efficiency savings."

A recent survey conducted by the National Computing Centre found that respondents believe the shortage of employees with IT skills is at its highest level for a decade.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were 'guaranteed response times' and 'allowing in-house IT staff to concentrate on more strategic issues'.